As the curtains of 2024 draw to a close, Paraguay emerges as a shining star in South America’s economic landscape. The International Monetary Fund’s (IMF) recent report forecasts a prosperous year ahead for Paraguay, with a projected Gross Domestic Product (GDP) growth of 3.8%, well above the regional average of 1.8%. In stark contrast, Argentina finds itself at the bottom of the list with a -3.5% GDP contraction.
Here are some key points and insights from the IMF report:
- Paraguay leads the pack with a projected GDP growth of 3.8%, followed closely by Uruguay at 3.2%. Brazil, Peru, and Venezuela are tied at 3%, showcasing a positive outlook for the region.
- Paraguay’s Central Bank (BCP) has maintained its monetary policy rate at 6% for the eighth consecutive month, in line with the IMF’s growth projections for the country. Looking ahead to 2025, the IMF anticipates Paraguay to sustain its growth momentum, while Argentina is expected to bounce back with a +5% growth rate.
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Factors contributing to Paraguay’s economic resilience include lower international risks, a gradual rate cut by the US Federal Reserve, strong job creation, and a decrease in unemployment to 4.1%.
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Domestic economic indicators paint a mixed picture, with Paraguay’s Monthly Indicator of Economic Activity (IMAEP) showing a 1.6% year-on-year growth in August. The Estimator of Business Figures (ECN) also saw a positive uptick, driven by increased sales in various sectors.
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Inflation in Paraguay has remained relatively stable, with the consumer price index (CPI) rising by 0.2% in September. Core inflation, excluding food and energy, stood at 3.6% year-on-year, indicating a manageable inflationary environment.
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Short-term indicators continue to trend positively, leading to an upward revision in Paraguay’s growth forecast. The BCP’s Monetary Policy Committee remains vigilant in monitoring both international and local developments to ensure inflation remains under control.
In conclusion, Paraguay’s economic outlook for 2024 appears bright, fueled by steady growth, favorable economic indicators, and prudent monetary policies. As the country navigates the uncertainties of the global economic landscape, maintaining this trajectory will be key to sustaining growth and stability in the years to come.
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